Scottish High Court of Justiciary Decisons

RICHARD JOHN GANNON v. HER MAJESTY'S ADVOCATE [2000] ScotHC 51 (11th April, 2000)

[1] On 7 December 1998 the appellant Richard John Gannon was convicted by a jury of having been knowingly concerned in the fraudulent evasion of VAT.

[2] The essence of the charge was that the accused obtained registration for VAT in a false name and thereafter submitted claims in that false name in which he pretended that he had been engaged in the export of antique furnishings. By these means, it was alleged, he obtained repayment of input VAT that he claimed to have incurred in the purchase of such antiques. At the conclusion of the Crown case the appellant's solicitor submitted that there was no case to answer. That submission was repelled by the sheriff. The defence thereafter led the evidence of the accused and one other witness and the accused was unanimously convicted by the jury.

[3] The appeal is confined to the argument that the sheriff erred in repelling the plea of no case to answer.

[4] The plea of no case to answer was made on the basis that the Crown had failed to demonstrate that the figures in the relevant VAT returns and the transactions to which the returns purported to relate were false. The VAT return forms were productions in the case. It was argued for the defence that it was for the Crown to demonstrate that the relevant purchases had not been made and that the exporting of the goods had not occurred.

[5] The court has had the benefit of a careful and well drafted report by the presiding sheriff which gives us a clear picture of how the evidence stood at the close of the Crown case. The Crown had led evidence that a firm called Highland Antiques ostensibly run by one John Peter McCormick had applied for VAT registration in October 1992 and had thereafter submitted VAT returns signed by "J P McCormick" which indicated that the firm was engaged in the export of antique furnishings and was therefore entitled to repayment of input VAT. There was evidence that the VAT returns were not supported by receipts indicating that the goods had ever been bought. This point was accepted by the defence. Moreover, there was evidence that there was no supporting documentation to vouch the alleged export sales. This too was accepted by the defence.

[6] In addition, there was identification evidence demonstrating that the person claiming to be John Peter McCormick was in fact the appellant; that the appellant was the tenant of the flat in Glasgow that was registered for VAT purposes as the trading address of Highland Antiques; and that the appellant had opened a bank account in the name of John Peter McCormick trading as Highland Antiques and had used that account in registering the firm for VAT purposes.

[7] When the appellant's house was lawfully searched evidence was found to demonstrate that he was operating there as Highland Antiques, but no evidence of any kind was found to suggest that he had made any of the alleged purchases or any of the alleged export sales. However, what was found was a sketch or flow chart in one of the appellant's notebooks which could, on one view, be taken to show that the appellant had drawn up a scheme for defrauding the VAT authorities by precisely the method alleged in the indictment. In this document there was a reference to a fictitious company and a fictitious bank account showing how these could be used in a scheme to reclaim non-existent input VAT in respect of items allegedly exported.

[8] There was also evidence that the appellant ran his own antique business R J Gannon Antiques and was well versed in VAT matters and in particular that he had regularly reclaimed input VAT on export sales made in that business.

[9] Finally there was evidence that Highland Antiques had made a substantial volume of sales within the UK and had not accounted for those in the returns. On the other hand in the evidence of all of those dealers who had bought from Highland Antiques there was no evidence of any export sales.

[10] At the stage when the submission of no case to answer was made the sheriff had to apply a straightforward test: whether putting the Crown case at its highest there was sufficient evidence to entitle the jury, if so minded, to convict.

[11] This was a case, in our view, where the Crown were not required to offer direct disproof of the honesty of the figures in the returns. There was a cogent circumstantial case emanating from various sources to demonstrate that the appellant had planned a fraudulent scheme of the kind libelled and that he had implemented it by setting up a VAT registration in a bogus name and obtaining refunds in that name. There was no evidence that Highland Antiques had ever made a single export sale. There was no supporting documentation of any kind to vouch the alleged purchases and sales in circumstances where such documentation was both appropriate and necessary. There was also evidence of the appellant's familiarity with VAT matters of this kind. It was also relevant that throughout the period libelled the appellant was running a legitimate business of the same kind in parallel with the business of Highland Antiques.

[12] When all of these circumstantial elements were taken together, there was a clear prima facie case to support the charge. In our view the sheriff was right in rejecting the defence submission. The appeal is therefore refused.